Utah Wins: We’re No 1 in Mortage Fraud

“Unfortunately, Utah has quite a reputation for mortgage fraud now,” Croft said, noting California also has moved up the list from No. 8 to No. 3.

Mortgage fraud takes many forms. A buyer lies on a loan application. A mortgage lender inflates someone’s income so they can qualify for a loan. A crook uses someone else’s Social Security number and uses it to buy a home [emphasis added].

No one is sure why Utah has such a high rate of fraudulent activity. One suspicion is that unscrupulous lenders try to qualify too many heavily indebted Utah families for homes they cannot afford. Another is the makeup of Utah’s trusting population, where many people place a great deal of trust in community, religious leaders and authority figures.

The state has made some efforts, some at the legislative level, to rein in fraud. In the past session, state regulators pushed the passage of Senate Bill 199, sponsored by Sen. Sheldon Killpack, R-Syracuse, designed to curb the growing amount of fraud committed by people who act as mortgage loan providers, real estate agents and appraisers without a state license.

COMMON TYPES OF MORTGAGE FRAUD
Application fraud: Buyers lie on a loan application or supporting documents to ensure they qualify for a home loan, or so they can borrow a larger amount of money.
‘Straw’ buyers: Crooks use someone else’s identity to obtain a mortgage and can pursue a related type of fraud called equity skimming, in which they cash out of any equity in the property.
Lender fraud: Lenders want so badly to make a loan, they lie on a loan application to ensure it will be approved.
Lease scams: Buyers may think they are getting a home but are actually signing long-term lease agreements with an option to buy the home sometime in the future.

As I’ve noted before, the legislature had the opportunity to take a good bite out of identity theft (see emphasis above), but decided ID theft is ok if it benefits business. The rumor is several banks, besides the manufacturing and sundry business folks, were behind the effort to kill the bill.

Obviously, the bill would be no “magic bullet” for ID theft and certainly wouldn’t solve the other types of mortgage fraud mentioned above, but it would have been a very good step in addressing the crime.

A year or so ago, an ID thief (illegal immigrant, in this case) was caught using a two-year-old girl’s SSN for his mortgage (I guess he defaulted on it and the family was tipped off when debt collectors came asking for their daughter). I’ll have to try to find the story and post a link here.

UPDATE: Must read – I found the 2 year old girl story: Investigative Report: Could Your Child’s ID Already Be Stolen? – note I was wrong about how the family was ‘tipped off’ and they did not explicitly state that he had a mortgage – only that he had loans. The story is a super example of id theft, particularly dealing with children’s SSNs.

Rodriguez later learned that Heber Uriel Nevarez, an employee of Centro de Servicios Hispanos – a tax and law assistance center in Ogden where he had his taxes prepared – was one of the subjects of an identity-fraud state investigation and allegedly illegally used Rodriguez’s personal information.

Juan de Jesus Lopez and Nevarez were alleged co-conspirators in getting credit card numbers to buy vehicles and using stolen Social Security numbers [emphasis added], Roberts said. Court records show that Nevarez has a long history of traffic citations and lawsuits over alleged failure to pay his debts.

Victor Lopez, who owns Centro de Servicios Hispanos, met Nevarez a few years ago and gave Nevarez a job in early 2005 because he seemed like a “good person,” knew English and Spanish and was computer savvy. That’s where Nevarez and Juan de Jesus Lopez met, Victor Lopez said. Victor Lopez said his brother, who is an undocumented immigrant [emphasis added], has worked for him since moving to Utah in 1999. But he said Nevarez hasn’t worked for him since August 2006.

For Juan Jesus Lopez [no relation to “de Jesus Lopez”], the identity theft experience has delayed his plans to get a new house for his wife and three grown kids. He said he was “really mad” when he found out about someone using his information. “I couldn’t do anything because my credit was ruined.”